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Vacuum Maker Oreck Files for Bankruptcy

Posted By Allmand Law Firm, PLLC || 15-May-2013

Well-known vacuum company Oreck filed for Chapter 11 bankruptcy after decreasing vacuum sales. The company will continue operations during the filing, while in the process of restructuring in hopes of acquiring a buyer. Oreck is known for producing upright vacuums and cleaning products through online and direct phone sales, as well as through their Oreck Clean Home Center locations.

Oreck will use the Chapter 11 filing to restructure company finances and assets prior to being sold. Documents related to the filing suggest the company has been unable to generate enough funds to cover necessary expenses as they arise. Through a debtor-in-possession financing option the company will borrow roughly $11 million to continue operations. The company claims they already expect to lose over $3 million in the coming months due to lack of sales.

Aside from slumping sales, the company is working through management departures and other issues leading to revenue loss. While the company has let go some of employees, there are reports of upper management personnel leaving the company on their own because they were not in favor of where the company was going (before the filing).

Oreck has provided cleaning products for over 50 years. It was founded by David Oreck during the 1960s. The company has over 90 company-owned retail stores and over 500 employees including manufacture workers. The design for the upright vacuum was originally for a Whirlpool product but abandoned and picked up by Oreck.

Reference:

http://www.usatoday.com/story/money/business/2013/05/07/oreck-files-chapter-11/2142283/

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